What Are Chargeback Representments? Tips for Merchants

Read Time: 9 min

The process of chargeback representments can help a business avoid lost revenue, exorbitant fees, and the complete loss of credit card processing capabilities. While receiving a chargeback often results in a loss for your business, chargeback representment is a process through which you can fight illegitimate chargebacks. This process requires time and effort, but it prevents lost revenue from friendly fraud and other baseless chargebacks. And with every $1 of fraud now costing businesses more than $3.75 in real value, it’s more essential than ever to understand how to fight scammers.[1]Lexis Nexis. “The True Cost of Fraud™ Study“. Accessed on January 10, 2023.

This guide explores chargeback representment, including the process itself, how to prepare for it, and how to submit a case to protect your business from unfair chargebacks!

What Is a Chargeback Representment?

three documents in different colors inside two blue arrows making a circle during a chargeback representment

The term “chargeback representment” refers to the process provided to merchants to dispute chargebacks. If a merchant receives a chargeback, they can enter the representment process to challenge the cardholder or card issuer’s claims.

During the representment process, the merchant must submit compelling evidence to prove the charge’s legitimacy. For example, if a customer claims they never received an item for which they paid, a merchant may submit evidence the package was delivered to prove the order was fulfilled.

If the card issuer determines the representment evidence is compelling, it may overturn the chargeback and allow the merchant to retain the money from the transaction. And with more than 50% of business owners believing their chargeback rate has increased since 2020, an understanding of the representment process is essential for today’s business owners.[2]Cision US. “New Digital Payments in 2021: Opportunities and Chargeback Risks Survey from Kount, an Equifax Company, Reveals Payment Opportunities and Risks for Merchants“. Accessed on January 10, 2023.

The Representment Process Explained

The representment process helps businesses navigate chargebacks. When a customer or card issuer files a chargeback, your acquirer will notify you of the chargeback, the chargeback reason code, and the time limit for responding. If you decide the chargeback is valid, you can accept the chargeback, and the process ends.

However, if you want to contest the chargeback, you must gather evidence and submit a rebuttal letter to your acquiring bank before the provided deadline. Your acquirer will transmit the information to the issuing bank, which decides the case. Sometimes, the issuing bank may ask for further information or clarification.

Once an issuing bank decides on an outcome, they will notify your acquirer. If you remain unsatisfied with the decision, you may choose to take the case to arbitration. Likewise, if a customer loses a chargeback, they may decide to proceed with arbitration against your business.

a green dollar sign in the middle of two arrows making a circle

Automatic representment

In some cases, your acquiring bank handles chargeback representment without notifying you. For example, if a chargeback occurs, but the merchant’s acquiring bank has proof of its invalidity (payment data, etc.), they may automatically handle the chargeback without involving the merchant. It’s best to speak to your payment processor about what types of chargebacks they automatically fight.

Possible Chargeback Representment Outcomes 

There are two possible outcomes in the representment process: a decision in the merchant’s favor or a decision in the customer’s favor. If an issuing bank assesses the compelling evidence and decides the merchant has a valid case, it rules in the merchant’s favor. In this case, the payment will reverse back to the merchant. On the other hand, if an issuing bank believes the customer’s case is more compelling, it rules in their favor and does not return any funds back to the merchant.

While the above two scenarios represent the initial outcomes of a chargeback representment process, you must also consider arbitration and second chargebacks. If either party is unsatisfied with the outcome, it may lead to arbitration. Also, if you win a chargeback but your customer finds additional evidence, they may decide to initiate a second chargeback, which requires a second representment to continue contesting their claims.

Is Representment the Same for Every Merchant?

While the representment process remains broadly similar for merchants across the United States, businesses should still tailor their approach to the specific chargeback they are facing. The compelling evidence you must supply varies depending on the product you sold in the transaction. For example, if your business sells physical goods, evidence may include delivery tracking details, whereas digital goods providers may need to show a customer downloaded a product from a server. Likewise, other details, such as whether a product was purchased in-store or online, play an integral role in the representment process. Merchants must remember that each chargeback dispute requires unique details, meaning custom responses play a critical role in a successful representment process.

Reasons to Represent Chargebacks

Businesses should initiate representment in specific instances when a decision reversal is likely. Here are some valid reasons for initiating the chargeback representment process:

Friendly Fraud

Friendly fraud happens when a cardholder completes a purchase and files a chargeback, claiming they never authorized the transaction. Server data, security camera footage, signed deliveries, and other such evidence proves the transaction’s validity.

Upset Buyer

A customer may file a chargeback because they believe your products or services were not as described. However, if you can prove that you advertised products and services correctly, you may be able to reverse a card issuer’s decision.

Other Errors

Chargebacks can occur because of technical errors related to the transaction. Oftentimes, your acquiring bank handles these chargebacks without notifying you, as they can be resolved with documentation from the acquirer.

How to Prepare for Representments

If your business accepts payments, it is essential to have a plan in place for disputing chargebacks through the representment process. Your strategy should start with data retention. Be sure to record transaction details, delivery information, product descriptions, and other potential evidence.

Additionally, have enough money on hand to handle chargeback representments. During the process, you may be exposed to revenue loss, penalty fees, and an increased chargeback ratio. You’ll need enough saved to cover costs in case you lose your ability to accept card payments.

Lastly, consider deciding ahead of time whether to process chargeback representments in-house or with a third-party chargeback resolution team. Doing so will save you time when an event occurs.

How to Build & Submit a Representment Case

Building and submitting a representment case correctly is of the utmost importance if you want the best chance of reversing a chargeback. Incorporating the following steps may improve your chances of winning:

a calendar with the number 31 on it

Act within the designated time frame

The first step in any successful representment process is replying on time. If you don’t respond to the chargeback within the allotted timeframe, you automatically lose the case, regardless of the details associated with the transaction. Submitting strong evidence within the timeframe will make you look credible, increasing your chances of winning.

stack of financial documents for a business

Gather your compelling evidence

Provide strong evidence that the chargeback is illegitimate. The type of evidence required depends on the chargeback, its reason, and various other factors. For example, if a customer files a chargeback claiming a business refused a refund within the allotted return period, the business may provide evidence of their return policy along with the date the customer attempted to return the product.

What is compelling evidence for chargeback representments?

Some common types of compelling evidence provided in successful representment cases include:

  • Transaction Details: This includes receipts listing order totals, transaction time and date, etc.
  • Security Footage: This proves who made a particular payment.
  • Delivery Information: You can highlight signed-for delivery, tracking details, and more.
  • Store Policy: This can be information regarding your shipping and return policies.
  • Product Listing: You can use screenshots of product descriptions and product photos.
  • Server Details: This proves downloaded products and usage of said products.
  • Communication Logs: Communication with customers may include emails, live chats, and call logs.

Be sure to maintain evidence for a long time, as chargebacks can be filed up to 120 days after purchase. It may take up to four months or longer in some cases to receive a chargeback.

shining lightbulb with a pencil and star inside

Write a rebuttal letter

When fighting a chargeback, a rebuttal letter can be the best way to outline your overall case. The rebuttal letter must be concise, but it should also include all the relevant details regarding the chargeback and why it’s illegitimate. If you choose to use a third party to handle the representment process, they will write your rebuttal letter on your behalf.

a business owner working at a desk

Compile and complete forms and submit the representment

To complete the representment process, compile and submit your evidence, along with your rebuttal letter, to your acquiring bank. Your acquirer will transmit the documentation to the issuing bank for inspection.

5 Tips to Help You Win Your Representment 

While following the above process will help you improve your chances of winning a chargeback dispute, we have some extra tips to further increase your chances of winning.

1. Always store potential evidence

Evidence remains a critical factor in any successful chargeback representment. Ensure your business stores email communications, shipping tracking data, transaction details, policy information, and other potential evidence for as long as you can. Many card issuers offer up to 120 days for customers to file chargebacks.

2. Improve internal business controls

Improving your internal business controls will help you avoid chargebacks and fight unfair chargebacks. This can involve defining customer service standards, upgrading your data storage capabilities, choosing a reliable shipping partner, or otherwise taking steps to improve operations. Strong business controls and operational standards make proving a customer wrong in a dispute easier.

3. Remain aware of all deadlines

As discussed, staying on top of designated deadlines is essential for a business to win the representment process. Missing a deadline results in the customer automatically winning the chargeback, regardless of whether or not the charge was legitimate. Carefully review all requirements to ensure your business is able to effectively defend against chargebacks.

4. Develop a representment strategy

Developing a representment strategy will help you protect your business from chargebacks. You may choose to focus on particular types of chargebacks to which your business is most susceptible. Likewise, you may have a dedicated in-house team for representment or you may opt to outsource representment to a chargeback resolution service. Regardless, choosing a strategy upfront helps save you time and money.

5. Stay on top of chargeback reason codes

Card issuers communicate chargebacks via chargeback reason codes, which are alphanumeric codes indicating the reason for a particular chargeback. Chargeback reason codes may change at any time, so be sure to stay updated on the current codes. By monitoring the chargeback reason code, you can better understand the reason for the chargeback, determine whether the code is accurate, and assess how to best contest the chargeback.

What Should I Expect to Happen After the Representment?

After you file your representment documentation, it’s time to wait for a card issuer’s decision. If the issuer decides in your favor, the chargeback will be reversed, meaning you will retain the money from the customer’s purchase. However, if the issuer sides with the cardholder, the cardholder keeps the money, and you will incur chargeback fees from your payment processor.

If you disagree with the decision, you may escalate the dispute to arbitration, in which the cardholder brand makes the final decision. While this may result in extra fees and time spent, arbitration ensures your case is thoroughly reviewed. Arbitration is incredibly useful for large chargebacks and in preventing fraudsters. However, remember that your customers can also escalate the case to arbitration or file a second chargeback if they are unsatisfied with the results.

Unfortunately, it is impossible to completely eliminate chargebacks. However, understanding the chargeback representment process remains essential for business owners wanting to avoid friendly fraud and other illegitimate chargebacks. The best way to fight them involves using chargeback prevention tools when processing payments. Fortunately, many payment processors offer a range of chargeback protection services to help small businesses reduce exposure to payment fraud. These services greatly increase your chance of winning a chargeback representment or even avoiding chargebacks in the first place.

credit cards with a warning sign for businesses that have done chargeback representments

High-Risk Businesses Wanted!

Article Sources

  1. Lexis Nexis. “The True Cost of Fraud™ Study“. Accessed on January 10, 2023.
  2. Cision US. “New Digital Payments in 2021: Opportunities and Chargeback Risks Survey from Kount, an Equifax Company, Reveals Payment Opportunities and Risks for Merchants“. Accessed on January 10, 2023.

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